Türkiye raises fees from ships for passage through the straits by 8.3%

From July 1, Turkey will again increase the fee for passage through the Black Sea straits without calling at ports by 8.3% from $4.08 to $4.42 per ton of net tonnage of a merchant vessel. This was announced on June 5 by the Main Directorate for Maritime Affairs under the Ministry of Transport of the country. The previous increase in the cost of passage occurred on October 7, 2022, when the fee increased by a record 5 times ($3.28 from the previously approximately constant $0.8 since 1936). It is estimated that in 2023 the new tariffs will allow Turkey to earn about $900 million, compared with $160 million a year before last year’s increase.

By virtue of Art. 24 of the Montreux Convention, the Turkish government has been transferred all the functions of administering the passage of ships and it will notify all the involved embassies, as well as the UN and the International Maritime Organization, by a note about the increase in fees, recalls Sergei Glandin, partner of the NSP law firm and an expert in international law. “That is, there is no talk of violations of the convention in 2022 even now. Here it is worth seeing rather not a legal issue, but the problem of the obvious growth of the Turkish state’s appetites for this source of income,” the lawyer notes.

Ankara, according to the expert, is trying to increase fees in order to at least partially cover the budget deficit after the re-election of Recep Tayyip Erdogan, Amur Hajiyev, researcher at the Turkish sector of the Institute of Oriental Studies of the Russian Academy of Sciences, believes. The budget deficit of the central government of Turkey in March 2023 amounted to 47.22 billion liras ($2.46 billion), the country’s finance ministry announced in early April. The cumulative deficit for 2023 widened to 250 billion liras, mainly due to the aftermath of the devastating earthquake in February. In the election program, Erdogan promised a 20% reduction in gas prices and a 15% reduction in electricity prices for all households, as well as free gas supply to the population throughout the year from the new Sakarya field, which, according to Vedomosti estimates for April 2023, cost Ankara $751 million a year. “Because of the Ukrainian crisis and Western sanctions imposed on Russia, the dependence of the Black Sea states on shipping through the straits has greatly increased. The Turkish authorities have taken advantage of the current Ukrainian crisis,” Hajiyev said.

Mikhail Burmistrov, General Director of Infoline-Analytics, notes that the increase in tariffs is affected by a drop in traffic to the ports of southern Ukraine, which for the most part curtailed work with the start of NVO in February 2022. other harbors, with the exception of those operating under the grain deal. Before the outbreak of hostilities, they accounted for a significant part of the cargo traffic, now compensation is due to ships of the Russian direction,” says Burmistrov.

Hajiyev believes that Ankara, by increasing fees from ships, is also trying to increase the importance of the Istanbul canal, which is being built since 2021, bypassing the Bosphorus (its cost is estimated at $15-20 billion). “Although the Turks have not yet moved to the active phase of construction, the area and territory of work have already been designated. The only thing missing is financial resources, which the West and the rich Arab monarchies are not yet ready to give, ”the expert concluded.

The current increase in fares against the backdrop of October does not yet seem significant, but, obviously, Turkey continues to take advantage of the geopolitical circumstances associated with the growth of trade through the straits against the backdrop of anti-Russian sanctions, extracting the maximum benefit, says Vitaly Chernov, head of analytics at Portnews agency.

He recalled that a significant part of the cargo flow from and to Russia was reoriented specifically to the southern direction, including due to the lack of carrying capacity to the Far Eastern ports, as well as a sharp drop in trade in the western direction. Confirms the increase in the loading of the port of Taman and other Russian harbors, working to send and receive ships passing through the Bosphorus, and Burmistrov. According to him, Turkey is one of the few remaining hubs for Russia, both direct and parallel imports. In this regard, a further increase in tariffs by the Turkish authorities is not excluded, Chernov admits.

“All this, of course, increases the costs of freight carriers. An increase in the tariff by $3.28 per ton in October, if we are talking about, for example, a large-capacity bulk carrier, was tens of thousands of dollars. With the current relatively low freight rates for bulk carriers, this is equivalent to 10–20 days of freight. In 2022, when freight rates were 2-3 times higher, it seemed less significant,” says Chernov.